The Delhi High Court has recently interpreted the Supreme Court judgement in Bharat Aluminium Company v Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 ('BALCO') to lay down which courts would have jurisdiction for proceedings under the Arbitration and Conciliation Act, 1996 ('Act').
The Court has also interpreted the words 'has been made' occurring in §42 of the Act, which says that once an application under the Act has been made before a certain court, it will be that court which will have exclusive jurisdiction over the arbitral proceedings and all subsequent applications under the Act.
Facts:
The Appellant entered into an agreement with her father, i.e. the Respondent to jointly undertake construction and development in the real estate sector. The place of arbitration was Delhi. The arbitration clause also contained a specific clause stating that issues regarding the decision of the arbitral tribunal could be taken to any court of competent jurisdiction.
Pursuant to the award, the Respondent filed a §9 application in the Bombay High Court seeking a security to be deposited by his daughter. On the other hand, a §9 application was filed in the Delhi High Court by the Appellant seeking an injunction restraining the Respondents from selling, alienating or transferring the ownership interests.
Proceedings before the Division Bench:
Issues before the Court were as follows:
- Whether the courts in Delhi or Mumbai had exclusive jurisdiction to deal with the petitions?
- Whether the proceedings before it were maintainable in view of the bar under §42 of the Act?
Decision of the Division Bench:
- The Division Bench interpreted paragraphs 95, 96 and 97 of BALCO and ruled that the both courts, i.e. where the subject matter of the suit is located, and the courts situated in the place of arbitration would have concurrent jurisdiction. Therefore for the present case, the courts in Mumbai and Delhi would have concurrent jurisdiction.
- On the issue of maintainability of the petition under §9 of the Act, the Court rejected the two fold arguments of the Appellant which were:
- That for §42, the mere act of filing a petition before the registry of the Bombay High Court cannot be interpreted to mean that an application before that court "has been made" till the time that application is presented before a judge.
- Parties should not be allowed to file frivolous application before a court with a view to oust the jurisdiction of other courts.
The court rejected the first argument by saying that the hiatus between filing of an application and its presentation before a judge cannot mean that an application "has (not) been made". The court refused to comment on the second argument, stating that the Bombay High Court would take cognizance of these arguments. It is only if the Bombay High Court rejects the Respondent's application by terming it mala fide, with a view to oust jurisdiction of other courts, that the courts in Delhi would have jurisdiction.
The decision is an instance where the courts have taken a proactive step in discouraging multiplicity of proceedings and would act as a guideline in future to decide the territorial jurisdiction of courts under the Act.
For further information on this topic please contact Tuli & Co
Tel T +91 11 4593 4000, fax F +91 11 4593 4001 or email lawyers@tuli.co.in
www.tuli.co.inThe content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
